Question

Dougan, Inc. allocates overhead based on a predetermined overhead rate of $2.40 per direct labor hour. Employees are paid $12.00 per hour. Job 24 requires 4.2 pounds of direct materials at a cost of $15.00 per pound. Employees worked a total of 17.5 hours to complete the job. Actual manufacturing overhead costs totaled $80,000 for the year for the company. How much is the cost of Job 24?

Answer 1

Answer: Cost of Job 24 = $315

Step-by-step explanation:

Given that,

Overhead rate = $2.40 per direct labor hour

Employees are paid = $12.00 per hour

Job 24 requires = 4.2 pounds of direct materials and cost per pound = $15.00

Total hours employees worked for completing a job = 17.5

Actual manufacturing overhead costs for the year = $80,000

Hence,

Direct Labor = Employees are paid × Total hours employees worked for completing a job

= $12 × 17.5 hours

= $210

Direct Material = 4.2 pounds of direct materials × cost per pound

= 4.2 × $15

= $63

Manufacturing overhead = Total hours employees worked for completing a job × Overhead rate

= 17.5 × $2.40

= $42

Therefore,

Cost of Job 24 = Direct Labor + Direct Material + Manufacturing overhead

= $210 + $63 + $42

= $315